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Marginal analysis means comparing the benefits and costs of any particular action. If an action's benefits outweigh its costs, it should be taken.
In business, benefits and costs can often be measured in dollar terms. For example, in a monopolistically competitive market, a firm can increase its sales by lowering its prices. Whether or not the firm should lower its ...

Solution Summary

This solution explains the term "marginal analysis" and gives examples of how we use it to make decisions in business and in our personal lives.

101. After conducting STP analysis for her custom auto parts store and developing strategies
for each of the 4 Ps, Brenda now has to make _____________ decisions.
A. competitive response
B. resource allocation
C. product line
D. market growth
E. mission statement
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102. Lamar owns four dry cleaning stores in the suburbs of Orlando. He updates his STP
analysis annually, and adjusts his marketing mix based on the STP results. His next strategic
marketing decision will likely involve:
A. how Disney World crowds will impact his business.
B. which employees to promote or fire.
C. how to allocate resources among his four stores.
D. what new government regulations to implement.
E. when to shift from a concentrated to an undifferentiated strategy.
103. In most companies, marketing resource allocation decisions are made at the SBU or
___________ level of the firm.
A. corporate
B. product line
C. customer care
D. sales representative
E. accounting
104. A ___________ is a group of products that consumers may use together or perceive as
similar in some way.
A. SBU
B. STP
C. product line
D. market segment
E. promotional service
105. Heather has been assessing a number of her firm's products using the Boston Consulting
Group approach to portfolio analysis. She has been trying to assess the strength in a particular
market and is looking at the sales of the product and the overall market as well as the sales of
competitors. Heather is working on determining _________________.
A. relative market share.
B. market growth rate
C. competitive advantage
D. statistical census analysis
E. cash generation equivalents
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106. To determine how attractive a particular market is in using the BCG portfolio analysis,
__________________ is established as one axis.
A. competitive intensity
B. relative market share
C. ideal market distribution
D. market growth rate
E. profit potential
107. Based on the BCG portfolio analysis, products in low-growth markets that have received
heavy investments and now have excess resources to spin off are:
A. stars.
B. cash cows.
C. question marks.
D. dogs.
E. None of the above
108. Fernando was thrilled to find out that his company had just decided to invest a great deal
of money in the product he was managing. He knows that even with its recent high rate of
growth and the fact that it was dominating the market, he would need more money to establish
it firmly. Using the BCG portfolio analysis, his product shares characteristics with other:
A. stars.
B. cash cows.
C. question marks.
D. dogs.
E. None of the above
109. Using the BCG portfolio analysis, dogs should be phased out unless:
A. the CEO of the firm is a champion of the product.
B. additional resources could convert the product into a star.
C. it complements or boosts the sales of another product.
D. the market might rebound.
E. None of the above. Dogs should be phased out.
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110. Portfolio analysis is a useful and powerful tool, but firms often need to take a more
balanced approach because:
A. measures are difficult to obtain and project
B. classifications can become self-fulfilling prophesies and strengths and weaknesses are
distorted.
C. substitute approaches can offer different insights.
D. All of the above.
E. None of the above
111. Starbucks has developed a number of metrics beyond purely financial metrics. Knowing
the importance of perceptions and knowing the importance of developing ways to
demonstrate its activity, Starbucks tries to find clear ways to:
A. build brand equity.
B. demonstrate its sense of corporate social responsibility.
C. address concerns of opponents at local, regional, national and global levels.
D. help consumers feel better about their purchases.
E. All of the above
112. The strategic marketing planning process:
A. is a five-step process that should always be used in order.
B. can be used in reverse if desired.
C. begins with setting appropriate, measurable: outcomes.
D. is not always sequential.
E. forces marketing managers to think rationally.
113. During the implementation phase, Jonathon finds he does not have sufficient resources to
accomplish the objectives that were previously established. Jonathon will likely:
A. ask for more resources.
B. change the planning objectives.
C. consider abandoning the plan.
D. any of the above.
E. all of the above.
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114. Which of the following is NOT one of the four major growth strategies marketers
typically utilize?
A. market penetration
B. market development
C. product proliferation
D. diversification
E. product development
115. For many years, because of the size of the U.S. economy, domestic companies ignored
international markets, preferring to expand their marketing efforts toward existing customers.
These companies were pursuing a ________________ strategy.
A. market penetration
B. market development
C. product proliferation
D. diversification
E. product development
116. In many market situations, word-of-mouth referrals are a very effective source of new
customers. Marketers often encourage referrals as a _______________ growth strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
117. The marketing faculty at one university suggested the recruiting office offer a $50 gift
certificate at the campus bookstore to students who referred new students to the university.
This is a _______________ growth strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
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118. Adrienne decides to add new sales representatives and increase advertising in her
existing market for her line of security systems. Adrienne is pursuing a __________ growth
strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
119. Sarah has decided to pursue a market penetration strategy for her French cookware
product line. She will likely increase advertising, sales promotion, and sales personnel. She
may also consider:
A. intensifying distribution efforts.
B. investing in a travel agency.
C. shift resources into marketing a line of footwear.
D. expand into new territories.
E. all of the above
120. A ________________ growth strategy employs the existing marketing offering to reach
new market segments.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
121. Quitman sells his business language dictionary to college students throughout the United
States. He wants to sell the book to international students abroad. Quitman wants to pursue a
__________________ growth strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
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122. When pursuing a market development strategy, expanding into international markets is
generally:
A. more risky than expansion in domestic markets.
B. impossible due to negative attitudes about American products.
C. executed through international trade relief subsidies.
D. simplified by creating new products for export markets.
E. all of the above
123. H&R is a small, local heating and air conditioning business. They know the area military
base is potentially a profitable source of growth but also know it is difficult to get established
as a certified contractor with the government. H&R is considering a ____________ growth
strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
124. Many states create licensing requirements for a variety of professionals designed to
restrict entry into their market by professionals from other states. This strategy limits
____________ growth strategies.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
125. Marketers who design and offer new products and services to their existing customers
are pursuing a ____________________ growth strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
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126. Most banks now have customer relationship software which, when a customer contacts
the bank, tells the service representative what types of accounts, loans, and credit cards the
customer currently has. Service representatives use this information to sell additional banking
services. This is a ___________________ growth strategy.
A. product proliferation
B. market development
C. market penetration
D. diversification
E. product development
127. Whenever Arnold calls his insurance agent, the agent tells Arnold about new types of
insurance available. The agent is pursuing a ________________ growth strategy.
A. product development
B. market development
C. market penetration
D. diversification
E. product proliferation
128. In 2007, When Apple Computer Company introduced its new iPhone, adding cellular
telephone and Internet access to its iPod, the company was engaged in a _________________
strategy.
A. mission creep
B. antitrust
C. power positioning
D. customer excellence enhancement
E. product development
129. Introducing new products or services to a market segment the company is not currently
serving is called:
A. product development
B. market development
C. market penetration
D. diversification
E. product proliferation
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130. Researchers at Lobeco Chemical Company, a manufacturer of pigments for paint
companies, found one of their pigment compounds has incredible adhesive qualities and could
be used as glue in consumer markets. If Lobeco Chemicals pursues this opportunity it would
be pursuing a _____________ growth strategy.
A. product development
B. market development
C. market penetration
D. diversification
E. product proliferation
131. To develop winning value-based strategies by anticipating and interpreting change and
leveraging resources to address those changes, firms use:
A. macro strategies.
B. overarching strategies.
C. scenario planning.
D. change management.
E. effective mission statements.
132. The marketing department at Stuart's firm has assessed the strengths and weakness, and
opportunities and threats. Now the department with input from senior management will
identify different scenarios. Which of the following will NOT be one of their efforts?
A. Identify alternatives the firm might want to pursue
B. Match the firm's competencies with the opportunities' attractiveness
C. Reflect on the risks, benefits and costs in each alternative
D. Make sure they have correctly identified the competitors
E. Project what might happen two to five years into the future
133. Twyla has been asked to lead the effort in her firm's scenario planning effort. She knows
she'll have to look at strengths and weaknesses, and opportunities and threats. Twyla will
NOT have to look at which of the following factors?
A. Cultural
B. Demographic
C. Economic
D. Technological
E. Twyla will have to look at all of the above.
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134. The final step in scenario planning includes:
A. determining the marketing mix for the alternatives.
B. positioning all the likely alternatives.
C. embedding the macro strategies into the alternatives.
D. establishing breakeven points for the alternatives.
E. determining the profitability of the alternatives.
135. In developing an actionable marketing strategy, a firm will do all of the following
except:
A. create a marketing plan.
B. analyze and evaluate its marketing situation.
C. develop a segmentation, targeting and position strategy.
D. use scenario planning to integrate information and assess the viability of corporate
strategies.
E. poll key stakeholders, particularly employees and shareholders, about their preferred
options to ensure "buy-in."

136. Of what use is a sustainable competitive advantage to a firm?
137. The text states, "Viewing customers with a life-time value perspective, rather than on a
transaction-to-transaction basis, is the key to modern customer retention programs." Create an
example demonstrating a life-time value perspective. Why is customer retention almost
always a profitable marketing strategy?
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138. Although most people do not have a personal marketing plan, when would one be
appropriate?
139. One of the benefits of taking marketing courses is the opportunity to apply marketing
concepts to marketing yourself. When selling yourself, you are a product including all the
skills, aptitudes, and attitudes you bring to the market. What is a sustainable competitive
advantage? What can you do to give yourself a sustainable competitive advantage in the
marketplace?
140. Your marketing professor, Dr. Marketing, has been asked to participate in the
university's strategic marketing planning process. During the planning phase of the process,
what questions Dr. Marketing likely ask? Be specific, this is the university's strategic
marketing planning process.
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141. The text describes the case of Splenda, a product introduced into a market dominated by
two other products but successfully differentiated from the competition both in formula and
image. This gives Splenda a sustainable competitive advantage. What is a sustainable
competitive advantage? Describe an example of a product or business you have encountered
that has developed sustainable competitive advantage. Why is that product or firm advantage
sustainable?
142. Your marketing professor, Dr. Marketing, has been asked to participate in the
university's strategic marketing planning process. After completing the planning phase of the
process, Dr. Marketer has been asked to assist with the STP analysis. What questions will Dr.
Marketing ask? Be specific, this is the university's strategic marketing planning process.
143. As the text states, "Firms typically are most successful when they focus on those
opportunities that build on their strengths relative to those of its competition." Using the
automobile industry in the United States, describe an example of this type of positioning
strategy.
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144. Your marketing professor, Dr. Marketing, has been asked to participate in the
university's strategic marketing planning process. After completing the planning and STP
phases of the process, Dr. Marketer has been asked to assist with the implementing marketing
mix and allocating resources. What questions will Dr. Marketing ask? Be specific, this is the
university's strategic marketing planning process.
145. Jami, a sales manager for an industrial materials company, reviews each sales
representative's performance quarterly. He knows business has been good but is surprised to
see some reps are selling much more than their goals while others have not meeting their
goals. What should Jami do?
146. You and your friend Alison work in different parts of a large firm. In a recent analysis,
your area was labeled a "cash cow" and hers was labeled a "question mark." What things
would you do differently in your area than Alison would do in hers?
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147. Boston Consulting Group's Portfolio Analysis classifies a company's products or product
lines into a two-by-two matrix. What are the bases of classification and what are products or
product lines in each of the four quadrants called? What marketing strategies are usually
considered for each of the four classifications?
148. Your new sales manager, who previously worked for Boston Consulting Group, directs
each sales rep to "toss out the dogs," "exploit the stars," and "milk the cows." What should
you do?
149. After finishing his marketing degree, Ryan inherited the family shrimp shack restaurant.
The restaurant is a small, local institution that beach visitors have been coming to for decades.
Ryan wants to make his business grow and is considering either a market penetration or
market development strategy. Describe what Ryan will likely do if he pursues either strategy.
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150. Garden Gate is a one location nursery business, selling plants and flowers for home
gardeners. The new owners want to grow through either a product development or
diversification strategy. What will the owners likely do if they pursue either strategy?
151. Tyler is eager to demonstrate what he learned in his marketing course, and he suggested
to his supervisor that the firm should add scenario planning to its overall marketing planning
efforts. His supervisor was not exactly excited about the idea but he asked Tyler to draft a
very short memo explain the value. What should Tyler include?
152. Why is a good strategy necessary for a firm?
153. Why is it important to have a structured approach to planning and developing a
marketing plan?
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154. Southwest Airlines is known for being the low-cost provider in the U.S. airline industry.
What type of macro strategy has Southwest pursued?
155. What is the goal of product, operational, and customer excellence?
156. Every summer university administrators attempt to estimate how many students will
show up in the fall. When August arrives, they hire part-time instructors and re-assign faculty
to teach the courses students want. In the spring, administrators often go on a retreat to
consider how to do things differently next year. What three phases of the strategic planning
process do they engage in?
157. Through contacts with local realtors and architects, ABC Construction Company
consistently finds out who is considering having a home built before the larger, regional
building companies find out. What marketing situation does ABC Construction have?
158. Firms periodically conduct SWOT analyses. Why?
159. When using STP, what types of opportunities provide the greatest potential success?
160. Every time the cost of oil goes up, gasoline stations raise their prices. What type of
pricing strategy are they using?
161. Cosmetic companies spend significant sums advertising the benefits of their products.
The prices of their products often significantly exceed the cost of producing them. What type
of pricing strategy are these cosmetic companies using?
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162. Alex knows the pricing is the only part of his veterinarian business that brings in money.
Thinking strategically, how should Alex price his services?
163. When catalog companies send sale catalogs to their customers, which type of growth
strategy are they pursuing?
164. Why have many U.S.-based companies pursued market development strategies in
countries like Mexico, China, and Japan?
165. When musicians and their concert promoters began offering CDs of a live concert,
immediately after the concert ended, what type of growth strategy were they pursuing?
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